If you own multiple lots of a stock and don't sell all of it at one time, you need to tell the broker which shares to sell. Usually you do this by specifying a default lot selection method with the broker. Since lot selection is not information that comes through to AccountSync, we recommend you tell them to use FIFO (First In First Out).
All sales entered by AccountSync select shares sold using this method.
If you told the broker to use something other than FIFO, you need to manually edit the sale entry to reflect the actual shares sold.
Unfortunately, apparently even if you tell the broker to use FIFO, they may not select shares as bivio will. A club got this explanation from TDAmeritrade recently of how FIFO works for them since they had bought some of their shares using automatic DRIP investing.
Due to IRS regulations effective for 2012 going forward, shares that are enrolled in a Dividend Reinvestment Plan (DRIP) are held separately from shares that were not purchased within the plan. This is so that brokerage firms can accurately track shares that should be covered as of 2011 (equities) and those that should be covered as of 2012 (DRIP-enrolled securities). The requirements of this regulation are programmed into GainsKeeper, the system we use for tax lot reporting, and for that purpose any lot relief method you choose will initially only apply to your non-DRIP shares. The shares you purchased while in DRIP will not be acknowledged by the system until your non-DRIP shares have been depleted. Therefore, until your non-DRIP shares have been depleted, you will need to identify specific lots to sell.
Going forward, please make sure that you are specifying your lot assignments by 11:59 pm ET on settlement date of each sale trade.Identifying a specific lot is referred to as versus purchase (VSP). You will need to specify the symbol, date, quantity, and price for both the buy and the sale. IMPORTANT: This request must be made prior to settlement of the trade (trade date plus two business days) in order for us to honor your request.
Whether you purchased your shares as part of a DRIP or not is not a factor when sales are entered in bivio. So, if you do or ever did do DRIP investing, you could find that bivio sale entries do not line up with what the broker sold. In that case, you will need to make manual adjustments in bivio to report the same gain/loss the broker will on your taxes.
Bottom line,
1. Check gain/loss details between bivio and the broker every time you make a sale so any adjustments needed can be made prior to them causing issues with subsequent sales.
2. This is another of many reasons not to do Automatic Dividend Reinvesting (DRIP) if you want to keep your accounting simple and your problems from compounding.
Laurie Frederiksen Invest with your friends! www.bivio.com
Thank you for this explanation, i now realize why it was so hard to know what shares the broker used when we transferred some stocks for a withdrawal.
colleen goings treasurer
On Thu, Jan 28, 2021 at 9:10 AM Laurie Frederiksen <laurie@bivio.biz> wrote:
If you own multiple lots of a stock and don't sell all of it at one time, you need to tell the broker which shares to sell. Usually you do this by specifying a default lot selection method with the broker. Since lot selection is not information that comes through to AccountSync, we recommend you tell them to use FIFO (First In First Out).
All sales entered by AccountSync select shares sold using this method.
If you told the broker to use something other than FIFO, you need to manually edit the sale entry to reflect the actual shares sold.
Unfortunately, apparently even if you tell the broker to use FIFO, they may not select shares as bivio will. A club got this explanation from TDAmeritrade recently of how FIFO works for them since they had bought some of their shares using automatic DRIP investing.
Due to IRS regulations effective for 2012 going forward, shares that are enrolled in a Dividend Reinvestment Plan (DRIP) are held separately from shares that were not purchased within the plan. This is so that brokerage firms can accurately track shares that should be covered as of 2011 (equities) and those that should be covered as of 2012 (DRIP-enrolled securities). The requirements of this regulation are programmed into GainsKeeper, the system we use for tax lot reporting, and for that purpose any lot relief method you choose will initially only apply to your non-DRIP shares. The shares you purchased while in DRIP will not be acknowledged by the system until your non-DRIP shares have been depleted. Therefore, until your non-DRIP shares have been depleted, you will need to identify specific lots to sell.
Going forward, please make sure that you are specifying your lot assignments by 11:59 pm ET on settlement date of each sale trade.Identifying a specific lot is referred to as versus purchase (VSP). You will need to specify the symbol, date, quantity, and price for both the buy and the sale. IMPORTANT: This request must be made prior to settlement of the trade (trade date plus two business days) in order for us to honor your request.
Whether you purchased your shares as part of a DRIP or not is not a factor when sales are entered in bivio. So, if you do or ever did do DRIP investing, you could find that bivio sale entries do not line up with what the broker sold. In that case, you will need to make manual adjustments in bivio to report the same gain/loss the broker will on your taxes.
Bottom line,
1. Check gain/loss details between bivio and the broker every time you make a sale so any adjustments needed can be made prior to them causing issues with subsequent sales.
2. This is another of many reasons not to do Automatic Dividend Reinvesting (DRIP) if you want to keep your accounting simple and your problems from compounding.
Laurie Frederiksen Invest with your friends! www.bivio.com